The ‘Chinese car teasing’ could have far-reaching consequences for the EU.
Tell me, which party is actually happy with the decision of the European Commission to impose import duties on cars produced in China? This ‘fist on the table’ from Brussels could come back like a boomerang. Knowing China, these kinds of economic sanctions will get a reaction.
EU import duties
That reaction could backfire badly for European car manufacturers. Thanks EU, say the BMWs, Audis and Porsches of this world. If China were to make cars from Europe much more expensive, this would have serious consequences for German brands in particular. For example, China is the best-selling market in the world for Porsche. If Porkers suddenly become incredibly expensive there, the Chinese would go shopping elsewhere and Porsche would see its turnover evaporate.
Credit insurer Atradius fears this scenario, which would cause the EU decision to have a counterproductive effect. This is reported by the Telegraaf. Moreover, the total picture goes a bit further than just cars. European car manufacturers are partly dependent on Chinese suppliers for parts. If the Chinese government starts fooling around here too, this could have unpleasant consequences for the brands here. In short, how smart was that fist on the table of the EU really?
The consumer is ultimately the biggest loser in this whole story. On both sides of the world. Here in Europe cars can become more expensive if production costs rise with such a possible trade war. The Chinese consumer on the other hand has to pay more for the same car due to import duties. Nice man, geopolitical nonsense.
Now these scenarios have been sketched, but not yet absolute reality. There is always a possibility that the EU and China will find a middle ground that will satisfy both parties. In any case, there is no question of an escalation. Moreover, the EU is not the only one with import duties on cars produced in China, the United States and recently Canada also like to impose hefty duties.
Comments
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gregorius say
What this credit insurer has come up with and told us seems a bit like a high school study.
It assumes a situation that is far from likely to happen.Negotiating with China is difficult and they too shout before they act.
They have taken a step, Europe is reacting (late), and they want to take another step.
In the meantime, good negotiations are going on and it will all end up somewhere in the middle.What the EU should rather be talking about is why there are too few companies in the EU that have managed to extract enough subsidies (what is there, or what can be created) to be competitive with China in this area as well.
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Joris24 say
“Ultimately, the consumer is the biggest loser in this whole story. On both sides of the world.”
Ah yes, the forced factory workers / labor camp residents in China are victims when production decreases in China and the hundreds of thousands of factory workers / suppliers who will eventually be fired in Europe because China dumps cheap, heavily privacy-violating cars on our market with stolen technology and state support are also victims? Or am I looking at it wrong?
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ty5500 say
The Chinese should have seen it coming somewhere. China’s trade surplus is only increasing, they export much more than they import from Europe, America, etc., which has led to tensions in the past. In the meantime, car factories are being set up en masse in China, which are churning out gigantic quantities of electric cars for which there is still insufficient demand. It was only a matter of time before the foreign markets would hit the brakes and become more protectionist to prevent this situation from being magnified even further, especially since the Chinese demand for foreign cars such as European ones is decreasing. Conversely, the Chinese themselves have always shielded their market to keep sufficient knowledge in-house, such as with the joint venture rules.
Time will tell who will take the biggest hit, but if you export as much as China, you are also in a vulnerable position and it will be difficult to punish Europe and America without seriously shooting themselves in the foot.
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left-hand drive say
China is not doing so well at the moment, domestic consumption is decreasing and exports have also been stalling for a while. This is due to several factors, but the population of China is shrinking at the moment and that is putting everything under quite a bit of pressure. There are also half-finished cities where no one wants to go, but the government cannot let that company (the state) collapse because then the whole system will fall apart, and not just China’s. There are many more problems and that car tax is just a drop in the ocean
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